Collection of VAT to be automated 2nd quarter - GRA

The collection of Value Added Tax (VAT) will be automated by the second quarter of this year, the Ghana Revenue Authority (GRA) has stated.

The measure will involve linking the teller systems, including point of sale (POS) devices of VAT-eligible companies and supermarkets, to ensure that the tax is credited directly to the GRA at the point of purchase.

The measure will ensure convenience in the payment and filing of VAT returns, broaden the tax net and enhance compliance with the ultimate goal of increasing revenue collection for the state.

The acting Commissioner-General of the GRA, Mr Ammishaddai Owusu-Amoah, who disclosed this in an exclusive interview with the Daily Graphic, explained that the initiative was part of a comprehensive strategy to eliminate human interference in tax revenue collection.

“Basically, it’s a service that, through your phone, POS devices or normal till systems, ensures that at the time of sales, the VAT component is deducted and immediately credited to the tax authority automatically.

“With this, you don’t have an interval between the time of collection and the time of accounting for what has been collected on behalf of the authority,” he said.

Mr Owusu-Amoah also explained that the automation would not require the issuance of the normal VAT receipts, but that through the till or POS devices, the accounting, deduction and settlement would be done.

He said the authority had done an in-depth examination of the VAT regime, which indicated to it that what the country realised from VAT was a fraction of the potential that existed.

VAT investigation

The GRA, last year, deployed some members of the Nation Builders Corps (NABCO) to visit small and medium enterprises (SMEs) to check on their VAT compliance levels.

It came to light that many of the SMEs were not issuing VAT receipts at all, with another large chunk falsifying their declarations.

The VAT collection automation was, therefore, to resolve such challenges and expand the tax net to rope in a larger chunk of the informal sector, the commissioner-general said.

He said many countries, including emerging and frontier markets such as Rwanda, Tanzania and Fuji, had done it to significantly improve their VAT collection.

Timelines

“We want to ensure that in this year these lapses are eliminated, and this can only be done if we automate VAT collection, so that it is collected at the point of purchase.

“We have gone far in terms of engaging various service providers and we are in the process of going through the tender process to identify a specific service provider,” Mr Owusu-Amoah said.

Alongside the automation, he added, the GRA would massively deploy NABCO personnel to continue with VAT invigilation, assess the level of compliance, identify and draw the attention of the authority to recalcitrant corporate bodies that were not living up to their tax obligations.

The GRA would also embark on mass education to sensitise the public, especially those in the informal sector, to understand the need to voluntarily comply, he added.

Cash elimination

Expatiating on the automation, which is expected to eliminate cash and cheques from its system, the commissioner-general said this year the GRA would allow banks to become the recipients of all taxes.

“This will ensure that from the banks individuals and corporate bodies will be able to know their tax obligations, pay their taxes and also collect their tax clearance certificates at the same place,” he said.

That, he said, would improve revenue collection, “not because our people are bad but because it is not our core business. Our core mandate is tax collection, not cash handling; that is the job of the bank. So we will eliminate cash and cheques from our system”.

Increase integrity

Another initiative by the GRA this year is to create a more visible interface with the public, making it easier for taxpayers to reach the authority to lodge complaints for redress.

“People have had concerns about tax payments. So we’ll give telephone numbers and contacts through publications, so that any taxpayer who feels not well treated can report for remedial measures. Taxpayers can be assured that we will protect their identities and deal with the issues,” the commissioner-general said.

In addition to that, he said, the GRA would strictly enforce a code of conduct for staff, including the declaration of assets within the authority to ensure that people were living the values of the organisation.

Debt collection

He said the authority still saw a lot of avenue in oil companies and that there were opportunities and loopholes that would be blocked to improve revenue performance.

It would also introduce e-commerce taxes in ways that would stir growth in the industry, he added.

“This includes ensuring that the tax incidence does not fall on the consumer of the service but the beneficiary, who mostly sits somewhere outside the jurisdiction. This is something that is growing worldwide and we want to be part of it,” Mr Owusu-Amoah explained.